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North Sea tax receipts slump to £35m | North Sea tax receipts slump to £35m |
(35 minutes later) | |
Tax receipts from offshore oil and gas slumped to just £35m in the last financial year, according to figures from HM Revenue and Customs. | Tax receipts from offshore oil and gas slumped to just £35m in the last financial year, according to figures from HM Revenue and Customs. |
The figure is the lowest recorded since the early days of North Sea production. | The figure is the lowest recorded since the early days of North Sea production. |
Corporation tax from offshore drilling raised £538m but that was offset by rebates on Petroleum Revenue Tax, totalling £503m. | Corporation tax from offshore drilling raised £538m but that was offset by rebates on Petroleum Revenue Tax, totalling £503m. |
The latest figure compares with £2bn of tax revenue in the 2014-15 financial year. | The latest figure compares with £2bn of tax revenue in the 2014-15 financial year. |
Four years ago, the Treasury raised £11bn from the two sources of tax on offshore production profits. | Four years ago, the Treasury raised £11bn from the two sources of tax on offshore production profits. |
Much of last year's fall reflects lower profits from oil and gas, after the oil price slumped, as well as tax deductions for a high level of investment. | Much of last year's fall reflects lower profits from oil and gas, after the oil price slumped, as well as tax deductions for a high level of investment. |
Tax rates were cut by Chancellor George Osborne during the most recent recorded year. | Tax rates were cut by Chancellor George Osborne during the most recent recorded year. |
The Office for Budget Responsibility has forecast negative tax returns for the next few years. | The Office for Budget Responsibility has forecast negative tax returns for the next few years. |
Industry 'struggle' | |
Responding to the tax figures, industry body Oil and Gas UK's economics director, Mike Tholen, said: "At around $40 per barrel, oil is still more than 60% lower than it has been over the last three years. | |
"In these conditions, the UK North Sea industry will continue to struggle to sustain its current scale. | |
"More than £330bn in 2014 money has been paid to date on UK oil and gas production, however, HM Treasury has noted that tax take on production will fall in 2015-16 and fall further by 2021. | |
"Despite the projected fall in production taxes which is a consequence of the current low oil prices, industry will remain a significant employer, provider of energy security, hub of innovation and leader in the export of goods and services to overseas markets." | |
He added: "Although the sector has seen success recently in reducing its cost to produce a barrel of oil or gas by a third, unfortunately the indications suggest that the oil price will remain lower for longer, so it's crucial the pace of these efforts doesn't abate." |